Tweet [1]
Mark Thoma writes [2] (HT: Brad Delong [3]):
Regulation is rarely flawless when it is first imposed. Adjustments are needed to make sure that the intent of the original legislation is carried out, and to plug any new holes that are discovered.
He goes on to say that because the Republicans are pawns of the banking industry, they won’t bother fixing any problems with regulation.
I don’t know what the intent of any legislation is. I have enough trouble defining it in a personal context let alone in the context of a political outcome. Why did someone do me a favor? Affection? Kindness? In hopes of my reciprocating down the road? To impress me or their friends? All of the above? When I look into my own heart I can’t even untangle those motives though I certainly know what to say when someone asks.
In a political decision, whose intent should I count? The economists who imagined how it might turn out if everything went smoothly? The person on the street who has a one or two sentence version of the legislation in mind? (This legislation will save the country! Or, this legislation is for the children!) The politicians who supported it even though they didn’t like it? The politicians who supported it because they thought it would help them get elected? The lobbyists who twisted it so that it benefit their friends?
What was the intent of the tobacco settlement? The intent according to some was to punish the evil tobacco companies. Some say it was to help the children avoid smoking via education policies. I have no idea what the intent was. I do know the settlement made tobacco companies and lawyers a lot of money. I don’t think it did anything for the children. Yes, many activists and even some politicians had a different intent. But again, I don’t think that concept is meaningful. There is no single intent. There are multiple intentions and the result that comes out of the sausage factory depends on the machinery that does the processing. The result emerges. It is no one’s intent.
Politicians say things about what they intend. But I don’t take that very seriously. Politicians from both parties will say that they bailed out the financial system as a way to preserve Main St. and to prevent a systemic collapse and so on. But if the way that the financial system was preserved was done in a way to make money for Wall Street, what was “the” intent of the policy? Politicians and administration officials and central bank appointees have supported policies that keep salaries and compensation at investment banks artificially high. Politicians of both parties move back and forth between Washington and Wall Street. Was that the intent? Or was it just a series of bad luck and mistakes?
My essay on these issues is here [4].